Despite the gloomy outlook, Canada is still churning out hot employment data. Statistics Canada (Stat Can) data shows the economy added over 100,000 jobs in December. Along with higher participation, this helped drive the unemployment rate within spitting distance of the record. At least one Big Six bank sees another rate hike, with robust job data reinforcing that need.
Canada’s Job Market Is Still On Fire Despite Rising Rates
Canadian employment reinforced the economy is still running hot, despite rising rates. Canada added 104,000 jobs in December, much higher than expectations. BMO notes this is the second time in three months the economy has printed a six-digit increase in jobs.
A rise in jobs and increased participation drove the unemployment rate even lower. It fell 0.1 points to 5.0% in December, slightly above the 50-year low of 4.9%. The gains appear to be healthy ones too, according to the bank.
“Most aspects of today’s release were robust, with the increases mostly full-time (+85k) and entirely in the private sector for a change (+112k),” said Douglas Porter, chief economist at BMO.
He isn’t doubting that a recession will arrive within the next few months. Employment is the last pillar to give out before a recession, he suggests. However, this data was much stronger than the relatively flat growth the market anticipated.
“At the very least, today’s robust results support the view that the BoC will hike rates again later this month,” he said.
Canadian Employment Data Reinforces The Need For Higher Rates
The positive data reinforces the bank’s upward revision of their interest rate forecast. They see a 0.25 point hike at this month’s Bank of Canada (BoC) meeting, bringing the rate to 4.5%—the highest in well over a decade. They then expect it to hold for at least the year, as the BoC reassess the impact.
“Suffice it to say that with wages still running around 5% and the jobless rate holding at 5%, the risk is heavily tilted to the need for the Bank to ultimately do even more to quell underlying inflation pressures,” said Porter.
Higher rates are still needed Employment figures really don’t mean much Most of these jobs are low paying service jobs that realistically aren’t really jobs
I would generally agree. We don’t know if those jobs have salaries that can meet today’s basic cost of living, when it comes to major items such as housing, food, transportation / fuel, etc. What are the median wages within each income quintile looking like now, etc.? Are they sufficient?
Likely a mix of everything. Labour shortages in the Automation and Robotics sector is all time high after Covid retirement of some boomers. Head hunters are having a great time throwing money around due to the EV drive by traditional ICE producers to ramp up production to “Kill Tesla”. 3/4 of my team got poached – I’m not far behind to shift employer. Only way to get a decent raise is to change jobs. Sad and weird… they’re willing to pay 40k to a head hunter rather than giving it to existing employees. /shrug
I agree with you. This statistical datas are designed for whom? Should it be the basis to decide the bank rates? The wages are super low to meet day to day needs. Taxes are going up. Food cost, housing cost and many other segments are going up though bank rates going up. Everything is out of control means the strategy is not working. Creating more economic slavery?
Hello Mark,
No matter if these jobs are low or highly paid, people need to spend money for living and, this will increase money in circulation: this firing up inflation.
That’s what the Central Bank doesn’t want.
Fake stats 😴
They have to tell you this to justify the hikes.
When everyone was shutdown for covid and laid off. Then they call everyone back, are those considered new jobs created or are those the original jobs people had.
Ridiculous games they play.
Exactly, it’s low paying, no benefit garbage.
There is no way almost all service jobs are sufficient for anything besides sharing an apartment and a bus pass . If there were so many great jobs out there you wouldn’t need minimum wage laws As usual the massive rather insane immigration numbers are to help the liberals get re elected
How are jobs that you come back to after being let go from a shutdown considered new jobs.
Exactly, job numbers are nothing more than a readjustment. I also think people getting off unemployment checks to paychecks is a good thing. Most of the inflation is caused by external factors, not a hot economy. Food costs won’t go down by raising interest rates, probably cause them to go up because food producers will see increase in their costs. Carbon tax is one sure cause of increased cost to produce and bring goods to the market. Increaseing interest rates won’t change that either. High interest rates cause housing costs to soar, so actually increasing inflation. The BOC needs to be more creative than just jacking up rates. It’s using a sledge hammer to drive a tack, reducing inflation by destroying the economy.
These were mostly jobs filled by young people. Im guessing they had to get to work because their households (parents) are feeling the pain of higher rates and have asked them to contribute. Our mortgage just went from 3k to 5k. I am now seeking full time work to offset that increase.
Invoosters are very unhappy that interest rates are this high.
They want ZIRPs to become richer and richer while the working Canadians pay taxes to fund the police who will kick the unhoused in their faces like stray dogs.
Canada, in particular, Toronto is becoming a dystopia.
Higher employment numbers are increasing because government covid money has stopped and people are forced to go back to work. Also since the interest rates are more than double from a year ago people have to get a second job to pay mortgages and higher rent etc.
Employment rates are going up because people are finally going back to work after the shut down of the work force due to covid policy. Also people are getting second jobs to pay for their lofty mortgage payments and HELOCs. It’s not because the economy is great.
I remember employment being strong in 2008 despite similar interest rates. What’s wrong with it this time?
Um obviously inflation at record highs…
The hole dug is beyond repair… We don’t need higher rates we need creative thinking. We need free education for skilled trades and high school should make economics and tax laws learned at a higher level to create more people taking the risk involved in self employment. This real in turn create more jobs, instead of massive corporations keeping 90% of the profits for the fee instead of the many. The gap between classes has never been so great.
If Rise in Employment is one of the croreria for BOC to increase rate than does that mean within 6 months increase of more than 3% was extra ordinary jump in candian GDP ? Strategically, BOC is wrongly directed by govt.has neither control inflation nor controlling rate of interest.Looks like Covering big fiscal Loss during covid.
Interest rates in Canada are mostly tied to the movements in the Fed funds rate in America they normally move in tandem 85 percent of the time. Before Stephen Poloz was in power Canadian interest rates were always higher than American interest rates to protect the value of the Canadian dollar.
how many of these jobs were in the Federal Government sector?
Agree we need housing and food is basic need, and that is not affordable for average income.
Good news for retirees and savers as they’ll finally get some sort of return on their money even though the inflation rate has been redefined over the decades to make it appear a lot lower than it actually is. One has to go all the way back to 1990 and 1981 to see real wealth creation via the power of compound interest from high interest rates.